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Golden Entertainment Reports 2020 Second Quarter Results

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Casino resorts and distributed gaming operations reopened in Q2

June financial results significantly exceeded expectations

Ongoing operating and marketing expenses meaningfully reduced

Repaid $190 million of $200 million borrowed in Q1 under revolving credit facility

Golden Entertainment, Inc. (NASDAQ:GDEN) ("Golden Entertainment" or the "Company") today reported financial results for the second quarter ended June 30, 2020.

Blake Sartini, Chairman and Chief Executive Officer of Golden Entertainment, commented, "Our reopenings began in May with our Montana distributed operations, followed by our Nevada operations on June 4th and our Maryland casino on June 19th. I want to thank our team members for their dedication to our Company and their efforts to reopen our properties safely and efficiently. Our diversified gaming platform, with nearly 80% of our historical property Adjusted EBITDA derived from locals-oriented or regional gaming operations, is positioned to recover quickly from the impact of the mandated shutdowns.

"Our results since reopening have exceeded our expectations, with June Adjusted EBITDA up 14% over last June even with fewer days of operations. Performance in June was led by our Las Vegas Locals casinos and taverns which achieved double-digit revenue growth and collectively doubled their Adjusted EBITDA contribution compared to the same period last year. We generated a similar strong performance in June from our reopened Laughlin and Pahrump casinos, which increased revenue and grew Adjusted EBITDA by over 50%. In addition to strong gaming revenues across most of our businesses, we focused on significantly lowering operating and marketing expenses. For our Nevada casino operations, excluding The STRAT, our expense management initiatives drove an Adjusted EBITDA margin improvement of 2,000 basis points to almost 50% in June. Our distributed gaming businesses also performed well in June across Nevada and Montana with revenue growth of 6% and an Adjusted EBITDA increase of more than 18%.

"Given our quick actions in March to reduce expenses and increase our liquidity by drawing down $200 million on our existing revolving credit facility, we had no need to raise additional capital during the shutdown. In June, we repaid $190 million of the $200 million drawn on the Company’s revolving credit facility, which remains available to us for potential future liquidity needs.

"Our strong recent financial performance, significant and sustainable margin improvement, as well as our diverse local and regional operations, gives us confidence that we will recover from the current challenges and remain well-positioned for future opportunities."

Consolidated Results

The Company reported 2020 second quarter revenues of $76.0 million compared to $248.1 million in the second quarter of 2019. Net loss for the second quarter of 2020 was $78.6 million, or a loss of $2.80 per share, compared to a net loss of $14.4 million, or $0.52 per share, in the second quarter of 2019. Adjusted EBITDA was $(5.7) million for the second quarter of 2020 compared to Adjusted EBITDA of $49.8 million for the second quarter of 2019.

Casinos

Casino revenues were $39.4 million in the second quarter of 2020 compared to $158.7 million in the second quarter of 2019. Casino Adjusted EBITDA was $1.8 million compared to $48.0 million in the second quarter of 2019.

Distributed Gaming

Distributed Gaming revenues for the second quarter of 2020 were $36.3 million compared to $89.2 million in the second quarter of 2019. Distributed Gaming Adjusted EBITDA was $0.9 million compared to $13.7 million in the second quarter of 2019.

Debt and Liquidity

As of June 30, 2020, the Company had cash and cash equivalents of approximately $86.2 million. Total debt was approximately $1.2 billion, consisting primarily of $782 million drawn under the Company’s existing credit facilities (including $10 million under its revolving credit facility) and $375 million of senior unsecured notes. $190 million is currently available under the Company’s existing $200 million revolving credit facility.

Investor Conference Call and Webcast

The Company will host a webcast and conference call today August 6, 2020 at 4:30 p.m. Eastern Time, to discuss the second quarter 2020 results. The conference call may be accessed live over the phone by dialing (844) 465-3054 or for international callers by dialing (480) 685-5227; the passcode is 7685643. A replay will be available beginning at 8:00 p.m. ET today and may be accessed by dialing (855) 859-2056 or (404) 537-3406 for international callers; the passcode is 7685643. The replay will be available until August 9, 2020. The call will also be webcast live through the "Investors" section of the Company’s website, www.goldenent.com. A replay of the audio webcast will also be archived on the Company’s website, www.goldenent.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. Forward-looking statements can generally be identified by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "potential," "seek," "should," "think," "will," "would" and similar expressions, or they may use future dates. Forward-looking statements in this press release include, without limitation, statements regarding: the impact of the COVID-19 pandemic on our business and expectations regarding recovery of our business following mandated shutdowns; future financial and operating results; and the Company’s plans, strategic priorities, objectives, expectations, intentions. Forward-looking statements are based on our current expectations and assumptions regarding the Company’s business, the economy and other future conditions. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause actual results to differ materially include: the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments, including government-mandated closures or travel restrictions; the Company’s ability to realize the anticipated cost savings, synergies and other benefits of the American and Laughlin transactions and its other acquisitions, and integration risks relating to such transactions; changes in national, regional and local economic, political and market conditions; legislative and regulatory matters (including the cost of compliance or failure to comply with applicable laws and regulations); increases in gaming taxes and fees in the jurisdictions in which the Company operates; litigation; increased competition; the Company’s ability to renew its distributed gaming contracts; reliance on key personnel (including the Company’s Chief Executive Officer, President and Chief Financial Officer, and Chief Operating Officer); the level of the Company’s indebtedness and the Company’s ability to comply with covenants in its debt instruments; terrorist incidents; natural disasters; severe weather conditions; the effects of environmental and structural building conditions; the effects of disruptions to the Company’s information technology and other systems and infrastructure; factors affecting the gaming, entertainment and hospitality industries generally and other risks and uncertainties discussed in the Company’s filings with the SEC, including the "Risk Factors" sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and most recent Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update any forward-looking statements as a result of new information, future developments or otherwise. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.

Non-GAAP Financial Measures

To supplement the Company’s consolidated financial statements presented in accordance with United States generally accepted accounting principles ("GAAP"), the Company uses Adjusted EBITDA, which measure the Company believes is appropriate to provide meaningful comparison with, and to enhance an overall understanding of, the Company’s past financial performance and prospects for the future. The Company believes Adjusted EBITDA provides useful information to both management and investors by excluding specific expenses and gains that the Company believes are not indicative of core operating results. Further, Adjusted EBITDA is a measure of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the gaming industry. Other companies in the gaming industry may calculate Adjusted EBITDA differently than the Company.

The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. Reconciliations of Adjusted EBITDA to net income (loss) are provided in the financial information tables below.

The Company defines "Adjusted EBITDA" as earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment of goodwill, acquisition and severance expenses, preopening and related expenses, asset disposal and other writedowns, share-based compensation expenses, change in fair value of derivative, and other gains and losses. Adjusted EBITDA for a particular segment or operation is Adjusted EBITDA before corporate overhead, which is not allocated to each segment or operation. The Company defines "Preopening and related expenses" as inclusive of rent, organizational costs, non-capital costs associated with the opening of tavern and casino locations, and expenses related to The STRAT rebranding and the launch of the True Rewards loyalty program.

About Golden Entertainment, Inc.

Golden Entertainment owns and operates gaming properties across two divisions – casino operations and distributed gaming. Golden Entertainment operates approximately 16,400 slots, 130 table games, and 6,200 hotel rooms. Golden Entertainment owns ten casino resorts – nine in Southern Nevada and one in Maryland. Through its distributed gaming business in Nevada and Montana, Golden Entertainment operates video gaming devices at approximately 1,000 locations and owns over 60 traditional taverns in Nevada. Golden Entertainment is also licensed in Illinois and Pennsylvania to operate video gaming terminals. For more information, visit www.goldenent.com.

Golden Entertainment, Inc.

Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenues

Gaming

$

56,677

$

146,246

$

183,892

$

290,038

Food and beverage

10,168

52,104

51,715

101,862

Rooms

5,987

35,514

31,592

66,801

Other

3,142

14,206

15,932

29,261

Total revenues

75,974

248,070

283,131

487,962

Expenses

Gaming

35,231

84,007

113,343

166,355

Food and beverage

9,739

40,216

44,626

78,430

Rooms

4,586

16,008

18,541

30,409

Other operating

1,404

5,160

6,531

11,594

Selling, general and administrative

32,548

56,235

80,158

113,182

Depreciation and amortization

31,930

29,976

63,086

57,241

Impairment of goodwill and intangible assets

21,411

27,872

Acquisition and severance expenses

367

1,123

3,343

2,667

Loss on disposal of assets

702

585

1,291

832

Preopening expenses

9

738

114

1,516

Total expenses

137,927

234,048

358,905

462,226

Operating (loss) income

(61,953

)

14,022

(75,774

)

25,736

Non-operating expense

Interest expense, net

(16,407

)

(19,135

)

(35,153

)

(37,270

)

Loss on extinguishment and modification of debt

(9,150

)

(9,150

)

Change in fair value of derivative

(1,489

)

(1

)

(3,737

)

Total non-operating expense, net

(16,407

)

(29,774

)

(35,154

)

(50,157

)

Loss before income tax (provision) benefit

(78,360

)

(15,752

)

(110,928

)

(24,421

)

Income tax (provision) benefit

(206

)

1,344

(258

)

1,995

Net loss

$

(78,566

)

$

(14,408

)

$

(111,186

)

$

(22,426

)

Weighted-average common shares outstanding

Basic

28,072

27,762

28,001

27,667

Dilutive impact of stock options and restricted stock units

Diluted

28,072

27,762

28,001

27,667

Net loss per share

Basic

$

(2.80

)

$

(0.52

)

$

(3.97

)

$

(0.81

)

Diluted

$

(2.80

)

$

(0.52

)

$

(3.97

)

$

(0.81

)

Golden Entertainment, Inc.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(Unaudited, in thousands)

Three Months Ended June 30, 2020

Casino Segment

Distributed Gaming Segment

Nevada

Casinos

Maryland

Casino

Nevada

Distributed

Gaming

Montana

Distributed

Gaming

Corporate

and Other

Consolidated

Total Revenues

$

36,305

$

3,127

$

23,554

$

12,785

$

203

$

75,974

Net loss

$

(44,487

)

$

(1,492

)

$

(4,960

)

$

(234

)

$

(27,393

)

$

(78,566

)

Depreciation and amortization

24,273

1,071

4,097

1,805

684

31,930

Impairment of goodwill and intangible assets

21,411

-

-

-

-

21,411

Acquisition and severance expenses

189

-

109

25

44

367

Preopening and related expenses (1)

-

-

(1

)

-

10

9

Asset disposal and other writedowns

641

41

(11

)

36

(5

)

702

Share-based compensation

-

-

-

-

1,756

1,756

Other, net

-

48

41

-

28

117

Interest expense, net

90

1

9

1

16,306

16,407

Change in fair value of derivative

-

-

-

-

-

-

Income tax provision

-

-

-

-

206

206

Adjusted EBITDA

$

2,117

$

(331

)

$

(716

)

$

1,633

$

(8,364

)

$

(5,661

)

Three Months Ended June 30, 2019

Casino Segment

Distributed Gaming Segment

Nevada

Casinos

Maryland

Casino

Nevada

Distributed

Gaming

Montana

Distributed

Gaming

Corporate

and Other

Consolidated

Total Revenues

$

140,260

$

18,456

$

71,445

$

17,708

$

201

$

248,070

Net income (loss)

$

18,194

$

4,277

$

6,687

$

660

$

(44,226

)

$

(14,408

)

Depreciation and amortization

23,092

960

3,894

1,675

355

29,976

Acquisition and severance expenses

101

-

9

-

1,013

1,123

Preopening and related expenses (1)

685

15

660

-

137

1,497

Asset disposal and other writedowns

412

99

78

(4

)

-

585

Share-based compensation

-

-

-

-

2,134

2,134

Other, net

81

-

-

-

406

487

Interest expense, net

63

1

21

2

19,048

19,135

Loss on extinguishment and modification of debt

-

-

-

-

9,150

9,150

Change in fair value of derivative

-

-

-

-

1,489

1,489

Income tax benefit

-

-

-

-

(1,344

)

(1,344

)

Adjusted EBITDA

$

42,628

$

5,352

$

11,349

$

2,333

$

(11,838

)

$

49,824

Six Months Ended June 30, 2020

Casino Segment

Distributed Gaming Segment

Nevada

Casinos

Maryland

Casino

Nevada

Distributed

Gaming

Montana

Distributed

Gaming

Corporate

and Other

Consolidated

Total Revenues

$

151,204

$

16,198

$

85,677

$

29,646

$

406

$

283,131

Net (loss) income

$

(48,918

)

$

1

$

(4,086

)

$

(504

)

$

(57,679

)

$

(111,186

)

Depreciation and amortization

47,947

2,110

8,082

3,685

1,262

63,086

Impairment of goodwill and intangible assets

27,872

-

-

-

-

27,872

Acquisition and severance expenses

2,451

155

571

41

125

3,343

Preopening and related expenses (1)

225

-

(1

)

-

115

339

Asset disposal and other writedowns

1,262

47

(30

)

17

(5

)

1,291

Share-based compensation

-

-

-

-

4,002

4,002

Other, net

47

48

238

-

141

474

Interest expense, net

334

2

23

2

34,792

35,153

Change in fair value of derivative

-

-

-

-

1

1

Income tax provision

-

-

-

-

258

258

Adjusted EBITDA

$

31,220

$

2,363

$

4,797

$

3,241

$

(16,988

)

$

24,633

Six Months Ended June 30, 2019

Casino Segment

Distributed Gaming Segment

Nevada

Casinos

Maryland

Casino

Nevada

Distributed

Gaming

Montana

Distributed

Gaming

Corporate

and Other

Consolidated

Total Revenues

$

275,889

$

34,201

$

142,850

$

34,660

$

362

$

487,962

Net income (loss)

$

38,056

$

7,104

$

13,719

$

1,234

$

(82,539

)

$

(22,426

)

Depreciation and amortization

43,781

1,914

7,617

3,281

648

57,241

Acquisition and severance expenses

387

-

22

13

2,245

2,667

Preopening and related expenses (1)

2,339

15

1,226

-

149

3,729

Asset disposal and other writedowns

668

99

78

(13

)

390

1,222

Share-based compensation

11

-

5

-

6,302

6,318

Other, net

92

-

-

-

1,259

1,351

Interest expense, net

113

3

36

3

37,115

37,270

Loss on extinguishment and modification of debt

-

-

-

-

9,150

9,150

Change in fair value of derivative

-

-

-

-

3,737

3,737

Income tax benefit

-

-

-

-

(1,995

)

(1,995

)

Adjusted EBITDA

$

85,447

$

9,135

$

22,703

$

4,518

$

(23,539

)

$

98,264

  1. Preopening and related expenses include rent, organizational costs, non-capital costs associated with the opening of tavern and casino locations, and expenses related to The Strat rebranding and the launch of the TrueRewards loyalty program.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005858/en/

Contacts

Golden Entertainment, Inc.
Charles H. Protell
President and Chief Financial Officer
(702) 893-7777

Investor Relations
Joseph Jaffoni, Richard Land, James Leahy
JCIR
(212) 835-8500 or gden@jcir.com